Focus: Beyond Meat's home in the meat aisle sparks food fight

Natural Grocers by Vitamin Cottage

06/06/2019 11:00

By Tina Bellon
    NEW YORK, June 6 (Reuters) - In a bid to directly compete
with ground beef and pork sausage, Beyond Meat Inc  BYND.O 
bills itself the world's first plant-based burger sold in the
meat case of U.S. grocery stores. 
    But interviews with nine U.S. grocery chains show that
retailers are still figuring out Beyond Meat's best fit in their
shopping aisles - and it may be closer to the vegan section than
the refrigerated meat department so desired by Beyond Meat.
    The stakes are high in the battle over supermarket real
estate, as upstart Beyond Meat seeks to quickly carve out its
place in the meat section in the face of pushback from meat
producers before more plant-based rivals from Impossible Foods
and Nestle SA  NESN.S  hit the market. 
    Natural Grocers by Vitamin Cottage Inc  NGVC.N , which owns
some 150 stores in 19 states, told Reuters it places Beyond Meat
in a refrigerated section with other alternative proteins like
tofu, and not the meat case, to avoid confusion among shoppers,
its co-president, Kemper Isely, said.
    At the 35 Kings Food Markets and Balducci's Food Lover's
Markets across New York, New Jersey, Connecticut and the
Washington D.C. area, Beyond Meat products are sold both in the
dairy and meat section.
    "Sales in both spaces have been great and customers
generally view this as a new food category," said Stephen
Corradini, chief merchandising officer at KB US Holdings Inc,
the investment firm owning the stores. 
    Other retail chains across the United States, including Town
& Country Markets Inc in the Pacific Northwest, New York-based
Morton Williams Supermarkets and Fresh Thyme Farmers Market in
the Midwest, echoed Corradini, saying they see high demand among
customers regardless of where Beyond Meat products are placed.
    Beyond Meat and its new meatless burger rivals are counting
on going head to head with meat inside stores. They avoid terms
such as vegan or vegetarian, and request stores do not place
their products in the supermarket vegan aisle where non-meat
eaters traditionally buy tofu, tempeh and other plant-based
alternatives. 
    Marketing its burger as one designed to look, cook and taste
like traditional ground beef, Beyond Meat targets mainstream
consumers who want to reduce their meat consumption amid growing
concerns over health risks, animal welfare and environmental
hazards of industrial animal farming.
    "Find it in the meat aisle," the company's website says of
its sausages and burger patties, which are made of yellow pea
protein, coconut and canola oil.
    Beyond Meat declined to comment ahead of its first earnings
report scheduled for Thursday afternoon.
    The company has warned in regulatory filings that changes to
retail placement could hamper growth by failing to attract new
customers and effectively compete with animal-based protein.
Analysts consider Beyond Meat's strategic placement a "strong
advantage" over competitors and a differentiating factor in
reaching the broadest possible U.S. market which they estimate
to be $100 billion by 2035. 
    Investors are bullish on the business model, boosting Beyond
Meat's valuation to more than $6 billion from $1.5 billion when
it went public on May 2, even though the California-based
company said it may never turn a profit.  urn:newsml:reuters.com:*:nL3N22E384 
    But while Beyond Meat requests stores sell its products next
to real meat, there are no contractual obligations on product
placement, according to interviews with nine retail chains. Some
grocers, such as The Fresh Market Inc, which operates some 160
stores across 22 states, place Beyond Meat in the freezer with
other veggie burgers or even the dairy section as they evaluate
sales and decide on a long-term placement strategy.
    "The freezer section is our initial go-to destination as our
guests otherwise wouldn't intuitively know where to find the
product," said Dwight Richmond, Fresh Market's director of
grocery. 
    Kroger Co  KR.N , Target Corp  TGT.N , Amazon.com Inc's
 AMZO.O  Whole Foods, Walmart Inc  WMT.N , Ahold Delhaize, Shop
Rite, Stater Brothers and Wegmans, which all sell Beyond Meat,
did not respond or declined to comment on their placement
strategy.   
    Sean Saenz, senior director of meat and seafood operations
at Gelson's, which owns 28 stores across Southern California,
said the retailer did not see strong sales when it initially
placed Beyond Meat in the freezer. 
    Since moving the burger out of the freezer, Beyond Meat
sales are up 60 percent, Saenz said, while sales in the overall
vegan section grew 20 percent.
    "We're still heavily weighted on probably 60 to 70 percent
of the Beyond Meat being sold from the vegan location," Saenz
said, calling purchases out of the fresh meat case "more of an
impulse buy."
    "I don't think it will ever be as big as meat, but it's
definitely adding growing sales which is something every
retailer is looking for," he said.

    CONSUMER CONFUSION? 
    The fresh meat case is one of the most restricted areas in a
supermarket because space is limited and perishable items need
to be chilled, according to Rick Stein, vice president of fresh
foods at the Food Marketing Institute, the retail trade
association.
    He sees retailers carving out space for plant-based meat
alternatives in the packaged meat section, next to bacon,
sausages and ham, a placement aimed at adding sales.
    The move has drawn the ire of the U.S. Cattlemen's
Association, which wants the meat case reserved exclusively for
real meat and says the new products create confusion and erode
the trust consumers place in the meat case. 
    "These plant-based companies are riding on the coattails of
the beef industry, which has spent decades building up a healthy
brand consumers trust," said Lia Biondo, USCA's director of
policy and outreach.

    COMPETITION COMING 
    The debate is about to get more noisy as Beyond Meat, which
began selling its burger patties to retailers about three years
ago, begins to face more plant-based competitors in stores.     
    "Competition over placement is clearly heating up as
everyone vies for a spot in the meat case," said Phil Lempert,
an expert on retail food trends who advises companies on food
branding and consumer behavior.
    Canadian packaged meat producer Maple Leaf Foods Inc
 MFI.TO , which sells plant-based meat alternatives such as
vegan ground beef under its LightLife brand, expects its
products in the meat case of U.S. retailers by this summer.
    Impossible Foods, which has so far focused on supplying
restaurants, plans to sell its Impossible Burger in
supermarkets' meat cases by the end of the year.
    Nestle, the world's biggest packaged foods group, seeks to
sell a pea-based veggie patty called Awesome Burger under its
U.S. plant-based Sweet Earth brand in the fall. 
    Tyson Foods Inc  TSN.N , the largest U.S. meat processor, is
also working on its own line of alternative protein products
after it sold its stake in Beyond Meat in April.  urn:newsml:reuters.com:*:nL3N22645B
    John Beretta, group vice president for meat and seafood
merchandising at Albertsons Companies Inc, which owns Safeway
Inc, Lucky and Randalls stores, said the meat case will change
based on consumer demand, with plant-based items potentially
replacing some meat products.     
    "We're at a point where plant-based meats have become a
segment of their own, and by the end of the year we'll have a
section solely dedicated to these products inside the meat
department," said Beretta.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Beyond Meat's share price more than doubles in vegan burger
maker's IPO    nL3N22E384
BREAKINGVIEWS-Veganism may prove a more durable diet fad   
nL5N1ZS20Z
EXCLUSIVE-Impossible Foods raises $300 mln with investors eager
for bite of meatless burgers    nL2N22L16U
Tyson sells stake in plant-based meat maker Beyond Meat   
nL3N22645B
Beyond Meat to start plant-based meats production in Europe next
year    nL4N2343BG
Beyond Meat surges after coffee chain Tim Hortons adds vegan
sausages to menu    nL4N22R4D5
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Tina Bellon; 
Editing by Anna Driver and Edward Tobin)
 ((Tina.Bellon@thomsonreuters.com; +1 646 573 5029; Reuters
Messaging: tina.bellon.thomsonreuters@reuters.net; Twitter
@TinaBellon))